Intrinsic value of Geospace Technologies Corporation - GEOS

Previous Close

$13.42

  Intrinsic Value

$1.90

stock screener

  Rating & Target

str. sell

-86%

Previous close

$13.42

 
Intrinsic value

$1.90

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of GEOS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  22.10
  20.39
  18.85
  17.47
  16.22
  15.10
  14.09
  13.18
  12.36
  11.62
  10.96
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.52
  6.36
  6.23
  6.10
  5.99
  5.89
  5.81
Revenue, $m
  93
  112
  133
  156
  181
  209
  238
  269
  303
  338
  375
  414
  454
  497
  541
  587
  635
  685
  737
  791
  847
  905
  966
  1,029
  1,094
  1,162
  1,233
  1,307
  1,384
  1,464
Variable operating expenses, $m
  160
  191
  225
  263
  305
  350
  398
  449
  504
  562
  615
  679
  746
  815
  888
  964
  1,043
  1,124
  1,209
  1,298
  1,390
  1,485
  1,584
  1,688
  1,795
  1,907
  2,023
  2,145
  2,271
  2,403
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  160
  191
  225
  263
  305
  350
  398
  449
  504
  562
  615
  679
  746
  815
  888
  964
  1,043
  1,124
  1,209
  1,298
  1,390
  1,485
  1,584
  1,688
  1,795
  1,907
  2,023
  2,145
  2,271
  2,403
Operating income, $m
  -67
  -79
  -92
  -107
  -123
  -141
  -160
  -180
  -201
  -224
  -240
  -265
  -291
  -319
  -347
  -376
  -407
  -439
  -472
  -507
  -543
  -580
  -619
  -659
  -701
  -745
  -790
  -838
  -887
  -939
EBITDA, $m
  -43
  -52
  -62
  -73
  -84
  -97
  -111
  -125
  -141
  -157
  -175
  -193
  -212
  -231
  -252
  -274
  -296
  -319
  -343
  -368
  -394
  -422
  -450
  -479
  -510
  -541
  -574
  -609
  -645
  -682
Interest expense (income), $m
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
Earnings before tax, $m
  -67
  -79
  -93
  -108
  -125
  -143
  -162
  -183
  -204
  -228
  -245
  -270
  -297
  -325
  -354
  -384
  -415
  -448
  -482
  -518
  -554
  -592
  -632
  -673
  -716
  -761
  -808
  -856
  -907
  -960
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -67
  -79
  -93
  -108
  -125
  -143
  -162
  -183
  -204
  -228
  -245
  -270
  -297
  -325
  -354
  -384
  -415
  -448
  -482
  -518
  -554
  -592
  -632
  -673
  -716
  -761
  -808
  -856
  -907
  -960

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  215
  259
  308
  362
  421
  484
  552
  625
  702
  784
  870
  960
  1,054
  1,153
  1,256
  1,363
  1,474
  1,590
  1,710
  1,835
  1,965
  2,100
  2,240
  2,386
  2,538
  2,696
  2,861
  3,032
  3,211
  3,398
Adjusted assets (=assets-cash), $m
  215
  259
  308
  362
  421
  484
  552
  625
  702
  784
  870
  960
  1,054
  1,153
  1,256
  1,363
  1,474
  1,590
  1,710
  1,835
  1,965
  2,100
  2,240
  2,386
  2,538
  2,696
  2,861
  3,032
  3,211
  3,398
Revenue / Adjusted assets
  0.433
  0.432
  0.432
  0.431
  0.430
  0.432
  0.431
  0.430
  0.432
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
Average production assets, $m
  81
  98
  116
  137
  159
  183
  209
  236
  265
  296
  328
  362
  398
  435
  474
  515
  557
  600
  646
  693
  742
  793
  846
  901
  958
  1,018
  1,080
  1,145
  1,212
  1,283
Working capital, $m
  30
  36
  43
  50
  59
  67
  77
  87
  98
  109
  121
  134
  147
  161
  175
  190
  205
  221
  238
  255
  274
  292
  312
  332
  353
  375
  398
  422
  447
  473
Total debt, $m
  5
  11
  17
  24
  31
  39
  48
  58
  67
  78
  89
  100
  112
  125
  138
  152
  166
  181
  196
  212
  229
  246
  264
  283
  302
  323
  344
  366
  389
  412
Total liabilities, $m
  28
  33
  39
  46
  54
  62
  71
  80
  90
  100
  111
  123
  135
  148
  161
  174
  189
  203
  219
  235
  252
  269
  287
  305
  325
  345
  366
  388
  411
  435
Total equity, $m
  188
  226
  269
  316
  367
  422
  482
  545
  612
  684
  759
  837
  919
  1,005
  1,095
  1,188
  1,285
  1,386
  1,491
  1,600
  1,713
  1,831
  1,954
  2,081
  2,213
  2,351
  2,495
  2,644
  2,800
  2,963
Total liabilities and equity, $m
  216
  259
  308
  362
  421
  484
  553
  625
  702
  784
  870
  960
  1,054
  1,153
  1,256
  1,362
  1,474
  1,589
  1,710
  1,835
  1,965
  2,100
  2,241
  2,386
  2,538
  2,696
  2,861
  3,032
  3,211
  3,398
Debt-to-equity ratio
  0.030
  0.050
  0.060
  0.080
  0.090
  0.090
  0.100
  0.110
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.130
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
  0.140
Adjusted equity ratio
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872
  0.872

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -67
  -79
  -93
  -108
  -125
  -143
  -162
  -183
  -204
  -228
  -245
  -270
  -297
  -325
  -354
  -384
  -415
  -448
  -482
  -518
  -554
  -592
  -632
  -673
  -716
  -761
  -808
  -856
  -907
  -960
Depreciation, amort., depletion, $m
  24
  27
  31
  35
  39
  44
  49
  54
  60
  66
  66
  72
  80
  87
  95
  103
  111
  120
  129
  139
  148
  159
  169
  180
  192
  204
  216
  229
  242
  257
Funds from operations, $m
  -43
  -52
  -62
  -74
  -86
  -99
  -113
  -128
  -144
  -161
  -179
  -198
  -217
  -238
  -259
  -281
  -304
  -328
  -353
  -379
  -406
  -434
  -463
  -493
  -525
  -558
  -592
  -627
  -664
  -703
Change in working capital, $m
  5
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
Cash from operations, $m
  -49
  -58
  -69
  -81
  -94
  -108
  -122
  -138
  -155
  -172
  -191
  -210
  -230
  -251
  -273
  -296
  -320
  -344
  -370
  -396
  -424
  -453
  -483
  -514
  -546
  -580
  -615
  -651
  -689
  -729
Maintenance CAPEX, $m
  -13
  -16
  -20
  -23
  -27
  -32
  -37
  -42
  -47
  -53
  -59
  -66
  -72
  -80
  -87
  -95
  -103
  -111
  -120
  -129
  -139
  -148
  -159
  -169
  -180
  -192
  -204
  -216
  -229
  -242
New CAPEX, $m
  -15
  -17
  -18
  -20
  -22
  -24
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
Cash from investing activities, $m
  -28
  -33
  -38
  -43
  -49
  -56
  -63
  -69
  -76
  -84
  -91
  -100
  -108
  -117
  -126
  -135
  -145
  -155
  -165
  -176
  -188
  -199
  -212
  -224
  -237
  -252
  -266
  -281
  -296
  -312
Free cash flow, $m
  -77
  -91
  -107
  -125
  -143
  -163
  -185
  -207
  -231
  -256
  -282
  -310
  -338
  -368
  -399
  -431
  -465
  -499
  -535
  -573
  -612
  -652
  -694
  -738
  -783
  -831
  -880
  -932
  -986
  -1,042
Issuance/(repayment) of debt, $m
  5
  6
  6
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  17
  18
  19
  19
  20
  21
  22
  23
  24
Issuance/(repurchase) of shares, $m
  101
  117
  136
  155
  176
  198
  221
  246
  272
  299
  319
  349
  379
  411
  443
  477
  512
  549
  587
  627
  668
  710
  755
  801
  849
  899
  951
  1,006
  1,063
  1,122
Cash from financing (excl. dividends), $m  
  106
  123
  142
  162
  184
  206
  230
  255
  282
  309
  330
  361
  391
  424
  456
  491
  526
  564
  602
  643
  685
  727
  773
  820
  868
  919
  972
  1,028
  1,086
  1,146
Total cash flow (excl. dividends), $m
  29
  32
  35
  37
  40
  43
  45
  48
  50
  53
  48
  50
  53
  55
  57
  60
  62
  65
  67
  70
  73
  75
  78
  82
  85
  88
  92
  96
  100
  104
Retained Cash Flow (-), $m
  -101
  -117
  -136
  -155
  -176
  -198
  -221
  -246
  -272
  -299
  -319
  -349
  -379
  -411
  -443
  -477
  -512
  -549
  -587
  -627
  -668
  -710
  -755
  -801
  -849
  -899
  -951
  -1,006
  -1,063
  -1,122
Prev. year cash balance distribution, $m
  23
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -49
  -86
  -101
  -118
  -136
  -155
  -176
  -198
  -221
  -246
  -271
  -298
  -326
  -355
  -386
  -417
  -450
  -484
  -520
  -557
  -595
  -635
  -676
  -719
  -764
  -811
  -859
  -910
  -963
  -1,018
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -47
  -78
  -88
  -97
  -105
  -113
  -119
  -124
  -127
  -129
  -129
  -127
  -124
  -119
  -113
  -106
  -98
  -89
  -80
  -71
  -62
  -53
  -44
  -37
  -30
  -24
  -18
  -14
  -11
  -8
Current shareholders' claim on cash, %
  61.3
  38.2
  24.2
  15.5
  10.1
  6.6
  4.4
  3.0
  2.0
  1.4
  0.9
  0.6
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Geospace Technologies Corporation designs and manufactures instruments and equipment used by the oil and gas industry to acquire seismic data in order to locate, characterize and monitor hydrocarbon producing reservoirs. The Company also designs and manufactures non-seismic products, including industrial products, offshore cables and imaging equipment. The Company operates through two segments: Seismic and Non-Seismic. The Company's Seismic product segments include traditional exploration products, wireless exploration products and reservoir products. Its seismic product lines consist of land and marine nodal data acquisition systems, permanent land and seabed reservoir monitoring products and services, geophones and geophone strings, hydrophones, leader wire, connectors, telemetry cables, marine streamer retrieval and steering devices and various other products. The Company's Non-Seismic product segments include imaging and industrial products.

FINANCIAL RATIOS  of  Geospace Technologies Corporation (GEOS)

Valuation Ratios
P/E Ratio -3.2
Price to Sales 2.4
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 18
Price to Free Cash Flow 22.5
Growth Rates
Sales Growth Rate 19.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -43.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -24.7%
Ret/ On Assets - 3 Yr. Avg. -17.1%
Return On Total Capital -26%
Ret/ On T. Cap. - 3 Yr. Avg. -18%
Return On Equity -26%
Return On Equity - 3 Yr. Avg. -18%
Asset Turnover 0.3
Profitability Ratios
Gross Margin -28.4%
Gross Margin - 3 Yr. Avg. -24%
EBITDA Margin -48.6%
EBITDA Margin - 3 Yr. Avg. -46.8%
Operating Margin -73%
Oper. Margin - 3 Yr. Avg. -74.8%
Pre-Tax Margin -73%
Pre-Tax Margin - 3 Yr. Avg. -73.5%
Net Profit Margin -77%
Net Profit Margin - 3 Yr. Avg. -63.3%
Effective Tax Rate -5.6%
Eff/ Tax Rate - 3 Yr. Avg. 14.9%
Payout Ratio 0%

GEOS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GEOS stock intrinsic value calculation we used $76 million for the last fiscal year's total revenue generated by Geospace Technologies Corporation. The default revenue input number comes from 0001 income statement of Geospace Technologies Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GEOS stock valuation model: a) initial revenue growth rate of 22.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for GEOS is calculated based on our internal credit rating of Geospace Technologies Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Geospace Technologies Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GEOS stock the variable cost ratio is equal to 173.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for GEOS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Geospace Technologies Corporation.

Corporate tax rate of 27% is the nominal tax rate for Geospace Technologies Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GEOS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GEOS are equal to 87.6%.

Life of production assets of 4.8 years is the average useful life of capital assets used in Geospace Technologies Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GEOS is equal to 32.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $176.587 million for Geospace Technologies Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 13.633 million for Geospace Technologies Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Geospace Technologies Corporation at the current share price and the inputted number of shares is $0.2 billion.

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